Socially Responsible Investing (SRI) possesses deep historical roots, but its recent institutionalization through Environmental, Social, and Governance (ESG) criteria has fundamentally altered its nature and objectives. This article provides a critical review of this transformation by analyzing the evolution of its theoretical underpinnings, market structures, and investor motivations. The objective is to synthesize this multi-decadal trajectory to elucidate the contemporary tensions between financial imperatives and ethical aspirations.
The study employs a critical and systematic literature review following a diachronic approach. It relies on a core corpus (represented by an exhaustive dissertation chapter) to establish a historical baseline (circa 1920-2012) and contrasts it with recent academic research and industry reports (circa 2018-2024) in order to analyze fundamental paradigm shifts.
The review reveals three major transformations: 1) a shift in the dominant logic, moving from values-based exclusion to an integration founded on risk management; 2) a potential convergence of the historically divergent American and European markets, driven by the pressure of global reporting standards and regulations; 3) a growing disconnect between the motivations of institutional investors (focused on the financial risk/return profile) and the ethical preferences of their end beneficiaries.
The article contributes to the literature by synthesizing the evolution of SRI and framing it within the central, unresolved tension between financial objectives (shareholder theory) and broader societal responsibilities (stakeholder theory). It highlights that the modern ESG movement, far from resolving this tension, has reframed it as a matter of financial materiality and risk.
